HCL Tech completes acquisition of German company ASAP Group; stock flat

HCL Tech share price:  Shares of HCL Technologies gained as much as 0.58 per cent to hit a high of 1,179.75 in the early trade on Friday after the company, in its regulatory filing, said it had completed the acquisition of German automotive engineering services company ASAP Group.

On July 12, 2023, the Noida-headquartered IT services company announced that it had signed a definitive agreement to acquire a 100 per cent equity stake in ASAP Group, an automotive engineering services provider. The transaction is subject to relevant regulatory approvals and is expected to close in September 2023, the press release added. 

"Headquartered in Ingolstadt, Germany ASAP is focused on future-oriented automotive technologies in areas such as autonomous driving, e-mobility and connectivity. ASAP serves top automotive original equipment manufacturers (OEM) and tier-1 suppliers in Germany. ASAP’s services portfolio comprises electrics/electronics, software, consulting, service testing and validation, and vehicle development. ASAP has over 1,600 employees across nine locations in Germany," the company added in its press release.

Indian IT Sector Outlook

The Indian IT sector has been under pressure for more than one and a half years now amid tough macros. The companies' June quarter numbers were also, more or less, subdued. However, Goldman Sachs sees revenue growth for India's IT sector companies picking up, driven by pent-up demand for IT services and the impact of adopting generative artificial intelligence (AI) technology.

"The bank forecast 9 per cent to 10 per cent revenue growth from 2025, saying the market could be underappreciating the sector's upside, even though near-term revenue is likely to remain "muted". "Indian IT services companies have doubled their market share in the last 10 years," analysts at Goldman Sachs led by Manish Adukia wrote in a recent note. READ MORE

On the contrary, domestic rating agency ICRA said recently that the Indian IT services sector's revenue growth will slow down to 3 per cent in the current fiscal year from 9.2 per cent in the previous financial year. Icra Ratings said profitability will also take a beating in this financial year, and the operating profit margin will narrow by up to 1 percentage point to 20–21 per cent.

The agency's sector head Deepak Jotwani said there has been "persistent uncertainty" in the key markets for IT companies which has resulted in pauses and deferral of non-critical projects and a slowdown in discretionary IT spends by key sectors like banking, financial services and insurance, retail, technology and communication. READ MORE